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French Socialist draws the line on government spending

By William EchiksonSpecial to The Christian Science Monitor / July 13, 1983



Paris

''Do you think Socialists just throw away money?'' Pierre Beregovoy, France's minister for social affairs, demanded. ''We know we can't spend more than we have.''

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With this statement, Mr. Beregovoy set the tone for his interview with the Monitor. In just a year at his post, he has brought an effective, no-nonsense, nonideological approach to controlling France's ballooning social welfare budget.

His brand of socialism has meant taking a hard line on welfare spending and raising taxes to make up for shortfalls. Only two weeks ago, Mr. Beregovoy announced social security benefits would rise by only 6.2 percent this year, well under inflation, and employer and employee contributions to unemployment insurance would rise from 4.8 to 5.8 percent.

The decisions angered both the bosses and the unions. The bosses have decided to withdraw from the unemployment insurance system's directing board, and the unions decried the government's unilateral ''coup de force.''

Such tough pragmatism may not be popular, but it is the chosen path of President Francois Mitterrand. The President recently broadened Mr. Beregovoy's responsibilities, effectively making him the third most important member of the government and a leading candidate to eventually succeed Prime Minister Pierre Mauroy.

''I cannot promise more social protection,'' Mr. Beregovoy says. ''We have to keep down our expenses.''

Initially after gaining power, the Socialists did not stand for such talk. Arguing that the country's ''safety net'' was ripped, as well as rigged in favor of the rich, they dramatically increased social-security spending. Rent allowances, family allocations, and minimum old-age pensions were all raised, a fifth week of annual vacation added, and the retirement age reduced to age 60.

''The benefit increases were necessary to catch up,'' Mr. Beregovoy said. ''They made our society more just.''

But such ''justice'' is hard to achieve in the midst of a recession. The social welfare budget was in arrears even before the Socialists took office: When the hoped-for economic growth did not materialize, the increased spending sent the budget careening out of control.

With the combined welfare deficit expected to reach 40 billion francs ($5.2 billion) in 1983, President Mitterrand decided in June 1982 to abandon his initial reflationary policies and eliminate the gap. He asked his personal chief of staff, Mr. Beregovoy, to replace the free-spending Nicole Questiaux at the Ministry of Social Affairs and National Security.

Many wondered whether the appointment would make a difference. After all, even conservative ministers had failed to control the mounting cost of the French welfare state, and Mr. Beregovoy was certainly no Gaullist.

But the switch did make a difference. Mr. Beregovoy has used his hardheaded intelligence to close the welfare deficit. His radical program to eliminate the social security deficit included higher taxes and reforms designed to hold costs down. The idea is to make the average Frenchman aware of the costs of the cradle-to-grave welfare state.

''We must make everyone responsible for the costs involved,'' Mr. Beregovoy said. ''For instance, we have increased alcohol and tobacco taxes. This is designed to sensitize the public to the tremendous social costs involved in either drinking or smoking in excess.''

Such thinking is not easily appreciated here - especially by union members and bosses.

''The Socialists started out on the right path,'' says Daniel Magal of the Confederation Francaise Democratique du Travail, a leftist umbrella trade union. ''They have made many necessary reforms. But now they have stopped midway down the path.''

To the employers, though, Beregovoy has not done nearly enough to take the burden of social-welfare spending off their shoulders. ''Our charges are way, way too high, five times more than in Japan and Britain, two times more than in the US and Germany,'' says Bernard Girous, spokesman for the Employers Association.

''With these expenses, we cannot remain internationally competitive.''

Mr. Beregovoy acknowledges the employers' complaint. He has taken some tentative steps toward having the government, not business, assume the burden of financing the welfare budget but says such a far-reaching reform must be implemented gradually.

For the time being, Mr. Beregovoy has a mandate not to increase charges on companies. Nonetheless, rising unemployment has forced the increase in employee contributions to balance the unemployment benefit system.

''The social partners must act together to fill'' any deficit in the unemployment-insurance system, he declared.

Nevertheless, Mr. Beregovoy says there is no chance of a Reagan-style revolution in welfare spending here - or even a movement toward a US-style private social insurance. ''We cannot accept individual insurance,'' he said. ''Our social protection must continue to be based on national solidarity.''

But Mr. Beregovoy realizes as austerity bites and the economy sags, he will find his task of controlling spending tougher. ''We cannot spend more,'' he says. ''I cannot promise more social protection.'' For this practical Socialist, preserving the gains already made would be a success.